An E&E Special Report

DROUGHT

Calif.'s quirky water rights system is showing its age

California's method for distributing surface water is under siege as a historic drought strains supplies and nerves.

Farmers whose water rights go back 100 years or more are being forced to cut withdrawals to help other farmers and imperiled fish.

"I've been in this region my entire life. I've never seen anything like this before," said Rick Gilmore, general manager of the Byron Bethany Irrigation District, which supplies farms and suburban water users in the San Francisco Bay area. "I believe the state of California's heading toward a catastrophic disaster, which could change California forever."

State regulators cut water rights for the Byron Bethany district and 100 or so other water users in Northern California on June 12. Some of those rights go back as far as 1903 (Greenwire, June 15).

Gilmore is considering filing a lawsuit against the state over withdrawal cutbacks and scrambling to find enough water for his district's 12,000 residents and 30,000 acres of farmland, which include almonds, cherries, tomatoes and alfalfa.

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The Stanford Vina Ranch Irrigation Co. has already filed suit in Sacramento Superior Court, alleging the State Water Resources Control Board has overstepped its authority by interfering with historic rights in order to protect fish. That district traces its water rights to an 1844 land grant secured by a California settler who asked the Mexican government for permission to farm.

"If the state keeps marching down this path, certainly it's going to shake the very foundation of private property rights in the state of California to the core," said Darrell Wood, a cattle rancher who depends on the Stanford Vina's access to Deer Creek, a tributary of the Sacramento River. "There's a lot at stake here."

Deer Creek is among dozens of tributaries whose diversions, the state has determined, constitute "waste and unreasonable use" and violate a state constitutional amendment that voters approved in a severe drought in 1928.

The Stanford Vina district, which amended its lawsuit last month to reflect the new water cutbacks, accuses the water board of taking private property without just compensation when it clipped rights in May 2014 and again last month to benefit the Central Valley spring-run chinook salmon and Central Valley steelhead. Both fish species are protected by the federal Endangered Species Act.

But the senior water users are opposed by those who argue that shaking up private water rights is exactly what's needed. The current system is an amalgam of past attempts to parcel out limited supplies, with vestiges of legal concepts that date from the gold rush. San Francisco's mayor famously went out to the Sierra Nevada in 1901 and tacked a sign on a tree to claim his city's right to the Tuolumne River, which it still depends on today.

"If you were to start out today to develop a system for allocating water during periods of shortage, you would under no circumstances come up with the system that California has adopted," said Barton "Buzz" Thompson, a Stanford University law professor and director of the school's Woods Institute for the Environment. "It is largely an accident of history. It might have worked well in the mid-19th century, but it is not a system designed for the early 21st century."

California left its pre-existing water rights system intact after it began its present-day system of issuing permits for "appropriative" rights in 1914. That means water users whose rights pre-date 1914 are governed differently than junior water rights holders who take water from the same stream.

Overlaying that systems is the English-style riparian right, reserved for landowners whose property abuts a pond, lake, river or stream. Those users are generally the highest priority and are last to face curtailments in dry years.

As a result of copious withdrawal rights, California surface water is already spoken for more than five times over in an average year, a University of California study found last year. Some rivers are more than 10 times over-allocated, the UC Davis and UC Merced researchers said (E&ENews PM, Aug. 14, 2014).

That actually isn't a problem in itself under the current system, which follows a policy commonly described as "first in line, first in right." Those who claimed water last are the first to cede their rights when supplies are short.

But with more farmland devoted to high-value crops, endangered species protections instituted over the past 25 years and water supplies dwindling to record lows the past two summers, water users are increasingly coming into conflict with each other and depleting groundwater. A water transfer deal between junior and senior users on the Sacramento River, for example, is currently in jeopardy because endangered salmon also need the water for spawning (Greenwire, June 17).

"We do a worse job of administering water rights than any other Western state," said Michael Hanemann, an agricultural and resource economist at the University of California, Berkeley. "We need to reform water rights and get ourselves in shape to deal with future water scarcity resulting from climate change."

Waste -- in the eye of the beholder

Deer Creek users like rancher Darrell Wood were among the first to fall prey to the state's new emergency authority to protect salmon and steelhead, approved in March.

The water board ordered Deer Creek users to stop taking water after flows fell to 47 cubic feet per second in mid-April -- less than a third of what the state court defined as average flows when it granted Stanford Vina Ranch 65 percent of the water in 1923.

Stanford Vina's lawsuit argues that by taking the water for fish, the state is interpreting too broadly the constitutional amendment against "waste and unreasonable use of water" that it has been used to justify the curtailments, as well as for their May requirement for urban water agencies to reduce their usage by an average of 25 percent (Greenwire, May 6).

"In 1928, there would have been many people who said the waste and unreasonable use of water would be to allow it to go out to the ocean unused," said Dustin Cooper , an attorney who represents the irrigators. "It seems to be they're kind of flipping."

On the other side of the argument are environmental groups, who defend the state's broad use of the "unreasonable" doctrine and encourage regulators to go further.

"The water rights system is broken and is failing to protect our environment," said Rachel Zwillinger, water policy adviser for Defenders of Wildlife. "The system is permitting certain interests to take so much water out of our rivers during drought that we are driving species like winter-run chinook salmon and the delta smelt to the brink of extinction.

"Existing law could be used to fix this problem if the waste and unreasonable-use doctrine was applied more consistently and rigorously to protect wildlife and the environment," she said. "The State Board could do this now using its current authorities, but additional staff would certainly help."

Fish and water rights are also coming into conflict over limited supplies in other areas.

The Tehama-Colusa Canal Authority, which serves 150,000 acres of farmland on the west side of the Sacramento River Valley, started taking water in the 1950s with the construction of the federal Central Valley Project. As such, it is known as a junior water rights holder because it gets its deliveries cut when supplies are low.

For the first time ever, Tehama-Colusa's deliveries have been cut to zero, so it is buying water from other Central Valley Project customers, who are entitled to at least 75 percent of their normal deliveries -- even in a drought -- because they started farming first.

In normal years, the authority gets 317,800 acre-feet from the Central Valley Project. It's hoping to buy about a sixth of that this year, at roughly 10 times the price, replacing some of the rest with groundwater and otherwise fallowing between 60,000 and 70,000 acres of annual crops of rice, wheat, corn, tomatoes, sunflowers and alfalfa.

But the deal is in jeopardy because of the needs of the endangered winter-run chinook salmon.

The water board had all but signed off on the deal but pulled back late last month after the Bureau of Reclamation found that its temperature measurements were inaccurate and couldn't assure that salmon would have cold-enough water to spawn in the Sacramento River, just below Shasta Dam (Greenwire, June 17). The water might be hotter than 56 degrees Fahrenheit during key spawning times later this summer, requiring Reclamation to release more water than it had planned.

If Tehama-Colusa isn't able to buy the water it had counted on, farmers will have to tear up grapevines, almonds, olives, pistachios and walnut trees -- permanent crops that need watering each year in order to stay alive. General manager Jeff Sutton estimates farmers will lose $500 million to $1 billion in crops, in addition to the $30 million worth of transfer water.

Searching for fixes

Changing the system would be "like taking someone's house they bought for $3,000 and now it's $300,000," he said.

"There's a lot that was invested based on those water rights," he said. "Those canals and diversion systems and the land. If you just pick that up and undo it, the implications would be very far reaching."

State regulators also dismiss the idea of wholesale changes to water rights.

"I'm quite certain if you were to design a water rights system from scratch, you could come up with a better approach, but the problem is we're not designing it from scratch," said Tom Howard, executive director of the water board. "It exists as it is today, and people have made investment decisions based on the way it is today.

"It's better to try to figure out how to make the system you have work than it is to just throw away the system, likely, because in this country, we try to provide certainty for things like property rights and things of that nature rather than just by fiat decide to change them."

One idea that has gained traction, at least among academics, is to make the system more like that of Australia, which has gone through repeated droughts and several rounds of reforms since the 1980s. Its rights are allocated according to a basin's estimated runoff, which is calculated annually, rather than by handing permanent rights to guaranteed amounts of water. The government provided money to buy back some water rights from irrigators and save water through efficiency, then dedicated those resources instead to environmental uses.

"To protect the environment, in my view, one thing we should do is to acquire or develop water rights for the fish," said Thompson, the Stanford law professor. "The fish should have their own water rights. We should be creating an environmental reserve that has clear legal recognition and can only be tampered with under extreme circumstances. You can do that, I think, more readily and with less constitutional doubt than just fundamentally changing the system."

Another way forward could be to employ existing legal processes more widely. The time-consuming process known as adjudication is generally used as a last resort for basins that are over-allocated and where users cannot agree on how to divide up the water. It involves setting "public trust flows" for fish and wildlife on individual rivers, then account for everyone else's water rights and assign a court-appointed "water master" to oversee diversions.

"What I tell people is within the existing laws and regulations, there is a much more effective type of water rights system, one that requires a lot more effort than we have now, but it doesn't necessarily require any new laws," Howard said. "You have a fully functional water rights system and it doesn't require any new laws, it just requires a great deal of effort. Everything takes a long time unless you put a lot of resources into it."

On that front, some see the political will beginning to rise.

Speaking at the Western Governors' Association Drought Forum in Incline Village, Nev., earlier this week, the California's top natural resources official said that Gov. Jerry Brown (D) has publicly suggested that the system of water rights might need to be re-evaluated if the drought continues. Notably, Natural Resources Secretary John Laird said, there wasn't a major political backlash when the governor made those comments.

"For the first time the public is sort of like, 'This is not making sense -- rice farmers are flooding because they have the most senior water rights, and we've got cities on the cusp of running out of water – we need to look at this,'" Laird said.

"I still think it’s thermonuclear, but for the first time it’s been moved to the table," he said.